Washington, D.C., partner Brad Campbell and Los Angeles partner Fred Reish were quoted in a Pensions & Investments article titled “Gears Shifting over Missing Participants.” The article discusses how the Department of Labor is now directing its regulatory firepower on defined contribution plans, after recovering more than $1.1 billion for thousands of missing participants in pension plans.
“This is one of those enforcement policies that jumped up fairly quickly,” Brad said. “It was borne out of the DOL looking at defined benefit plans and now it's morphed over into defined contribution plans.”
Brad noted that questions about missing participants have come up in every investigation his clients have experienced over the past year — questions that weren't asked in the past. There has been a marked uptick in the DOL's enforcement efforts regarding missing defined contribution participants and much tougher rulings that sponsors claim are either inconsistent or unfair.
“The department has not been uniformly consistent across regional offices as to how it responds and what corrective actions it wants to see,” Brad said.
Plan sponsors have closed ranks and sent letters to the DOL complaining about the aggressive positions taken by its field auditors and its “ad hoc” enforcement.
“The private sector intensely dislikes the government saying 'gotcha' when they haven't given clear guidance,” Fred said.
In a 2017 letter to the DOL, the American Benefits Council complained that auditors in several instances asserted that reasonable search steps require plan sponsors to search for missing participants every year and to use different search methods each time.
“When plan sponsors hear that they're shocked because they didn't even know they were supposed to be searching at all, much less every year and using all different kinds of search methods,” Fred said.